Leading cryptocurrency Bitcoin has exploded in value this year, though that volatility goes two ways. Bitcoin’s per-unit trading value plummeted from about $64,800 last week to just under $48,000 earlier today, April 23.
Reuters reported that the dip was at least partly caused by U.S. President Joe Biden’s new tax plans. These allegedly include an intention to significantly increase capital gains taxes for people earning more than $1 million, which seemingly sparked a widespread crypto sell-off as wealthy investors looked to rid themselves of risky assets.
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It wasn’t just Bitcoin that took a hit, as Ethereum — known in some tech hardware circles for being the target of the ill-fated Nvidia RTX 3060 mining limiter — plummeted too. Ethereum dropped from its record high of $2,600 to $2,100 following the reports of Biden’s tax plans; proportionally an even bigger fall than Bitcoin’s.
At the time of writing, both digital currencies appear on their way back up, with Bitcoin at $49,500 and Ethereum at $2,200, though these drops won’t do much to convince blockchain skeptics that crypto coins can act as reliable everyday currencies rather than investment opportunities. Bitcoin notably dropped from around $57,000 to $45,000 back in February, so it’s been lunging around quite a bit.
Biden’s reported capital gains tax increase is unlikely to target digital currencies specifically, though they have has been under particular scrutiny recently, amid concerns of both crypto laundering among U.S. financial institutions and of how the incredibly energy-hungry process of digital currency mining affects the planet.
A new cryptocurrency, Chia, was recently revealed with the specific aim of eating up less power than Bitcoin or Ethereum. This could introduce new problems, though: because “farming” Chia will require large amounts of hard drive or SSD storage space, prospective farmers in China are already buying up stock en masse, not unlike how Bitcoin and Ethereum miners bulk-buy graphics cards for their mining rigs.